BSP orders Banco Filipino closed, placed under PDIC receivership

(Updated 9:53 p.m.) The Bangko Sentral ng Pilipinas (BSP) on Thursday ordered the closure of Banco Filipino Savings and Mortgage Bank and placed it under the receivership of state-run Philippine Deposit Insurance Corp. (PDIC), saying its liabilities topped its assets by P8.4 billion.

In a press conference late Thursday, BSP Deputy Gov. Nestor Espenilla Jr. said the central bank's seven-man Monetary Board decided to place Banco Filipino under the receivership of PDIC since it was no longer paying its liabilities in the ordinary course of business.

"Banco Filipino cannot continue in business without involving probable losses to its depositors and creditors," Espenilla told reporters at the central bank.

The policy setting Monetary Board also took note that Banco Filipino’s management and board of directors failed to restore its financial health and viability after having been given more than ample time to address its problems.

Banco Filipino has insufficient realizable assets to meet its liabilities since its net realizable value reached P8.4 billion, or its liabilities overwhelming its assets, Espenilla said.

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Filing of appropriate cases

Espenilla said the Monetary Board authorized the filing of appropriate cases against the directors, officers, and other individuals who may be found in violation of banking laws and BSP rules and regulations.

In 2002, the BSP extended P3.5 billion in emergency loan to Banco Filipino, of which P2.6 billion remains unpaid.

Espenilla said the Monetary Board on Monday rejected renewed pleas of Banco Filipino to extend another P3 billion in emergency loan to cover its huge "overdraft" amounting to more than P900 million. [See: Banco Filipino declares holiday, BSP says explain]

"[The Monetary Board] has therefore decided to prohibit Banco Filipino from doing business in the Philippines and to place its assets and affairs under receivership," he said.

Deposit insurance claims

On Thursday afternoon, the PDIC took over the head office of Banco Filipino in Makati City, securing documents in the bank’s premises and preventing the further dissipation of its assets.

"The BSP is coordinating closely with [the] PDIC so that deposit insurance can be paid out as soon as possible," Espenilla said.

"In this connection, the condition, coverage, and quality of the records and documents of Banco Filipino will be material in ensuring immediate service to depositors," Espenilla added.

The BSP said depositors with a balance of P5,000 and below — about 53 percent of the total depositors — need not file their deposit insurance claims.

The PDIC will immediately process and mail payments within the week.

Those with balances of over P5,000 would still have to be validated and need to file for their claims, the central bank said. — JE/VS/PE, GMA News